Monday, June 25, 2012

Higher Ed: Handbook for Student Law

Castagnera, James Ottavio
New York, Bern, Berlin, Bruxelles, Frankfurt am Main, Oxford, Wien, 2010. X, 255 pp. Education Management: Contexts, Constituents, and Communities. Vol. 6 General Editor: M. Christopher Brown II
Print: ISBN 978-1-4331-0742-9 hardback SFR 120.00 / €* 107.00 / €** 110.00 / € 100.00 / £ 80.00 / US$ 129.95
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The Handbook for Student Law for Higher Education Administrators is a practical tool, intended for administrators dealing with students in higher education, focusing principally on four-year institutions. Addressing the ever-developing relationship between higher education and the law, the book will provide the academic administrator with the means to knowledgably and confidently navigate the many legal threats and challenges facing colleges today. Using examples from real cases and scenarios from different institutions, the handbook provides sample policies, checklists, and advice that administrators can apply to a wide variety of situations, both preventatively and proactively. Also included are relevant 2008-09 amendments to the Americans with Disabilities Act and the Federal Educational Rights and Privacy Act, and each chapter includes a section on the impact of the Higher Education Opportunities Act of 2008. The Handbook for Student Law for Higher Education Administrators is a compendium of practical knowledge and guidance, useful for any administrator dealing with the legal minefield that is higher education.

The Author: James Ottavio Castagnera, J.D., Ph.D., has spent more than twenty-five years practicing, writing about, and teaching law. He is an expert in employment law and policy, and is well versed in many areas of higher education law. He has been a labor lawyer and litigator with a major Philadelphia firm and the general counsel/corporate secretary for the then-largest convenience store chain in New Jersey and for the nation's number one econometric forecasting organization. He has published seventeen books, as well as some fifty professional/scholarly articles and book chapters. A frequent commentator in newspapers, magazines, and on the Internet, Castagnera's teaching has taken him to the University of Texas-Austin, the Wharton School of the University of Pennsylvania, and the Widener University School of Law. Currently he is legal counsel to a New Jersey university and president of a freelance writing firm. In 2007 he was an Academic Fellow on Terrorism in Israel under the auspices of the Foundation for Defense of Democracy. His seventeenth book, Al Qaeda Goes to College, was published in April 2009.

By Jim Castagnera
Part 1 of 2 
In September 2004, as the Bush reelection campaign shifted into high gear, reports in the press announced the Administration’s intentions to relax certain rules affecting for-profit colleges.

Six years, a recession, and the historic replacement of a WASP Republican by a black Democrat in the White House are producing a sea change in federal policy. This past summer, two tidal forces surged from Washington to whipsaw the for-profit side of the higher education industry.

The first is a new set of proposed regulations from the Department of Education (ED), aimed at punishing for-profit education providers whose former students fall short of requirements that will be associated with "gainful employment."

In a July 23 press release announcing the new regs, ED Secretary Arne Duncan said, "While career colleges play a vital role in training our workforce to be globally competitive, some of them are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use. These schools—and their investors—benefit from billions of dollars in subsidies from taxpayers, and in return, taxpayers have a right to know that these programs are providing solid preparation for a job."

The press release also notes, "To qualify for federal aid, the law requires that career colleges and training programs prepare students for gainful employment in recognized occupations." Under the proposed rules, "The Department would define … a twopart test: (1) measuring the relationship between the debt students incur and their incomes after program completion; and (2) measuring the rate at which all enrollees, regardless of completions, repay their loans on time." 

Students at for-profit schools are heavy borrowers

The picture of the early test results painted by ED isn’t pretty. "The median federal loan debt carried by students earning associate degrees at for-profit institutions in 2007-08 was $14,000—almost double the median debt for their peers at non-profit institutions." By way of contrast, "while 88 percent of recent borrowers from nonprofit institutions and 80 percent of borrowers from public institutions were able to pay down the balance of their student loans in recent years, only 55 percent of borrowers attending forprofit institutions were able to pay off more than accrued interest."

Federal student loans may permissibly provide as much as 90 percent of a for-profit school’s gross revenues. As a result, staff writer James Goodman of observes, "Although fewer than 10 percent of the estimated 19 million students enrolled in institutions of higher learning take courses from for-profit colleges, these schools account for 44 percent of all defaults on federal loans."

So Arne Duncan says, somewhat understatedly, "While proprietary schools have profited and prospered thanks to federal dollars, some of their students have not. This is a disservice to students and taxpayers…."

If ED’s proposed rules become effective in their proposed state, a school may have to warn admissions prospects and enrolled students that "they may have difficulty repaying loans for attending that program…." Certain debt and repayment delinquency thresholds will trigger ineligibility for financial aid for the school’s students.

Student loans, stage right: mystery shoppers, stage left
While, indeed, these proposed regs may prove onerous to some for-profit players, standing alone they might not reflect anything more than a prudent policy correction on the part of the DoE. More unusual—and, therefore, maybe more of a signal of which direction the obama administration is steering the ship of state—is the recent exercise undertaken by the Government Accountability office. The GAo engaged in what entrepreneurs, such as myself, with experience in the retail world, call "shopping." In the convenience store industry, where my experience lies, my partners and I regularly employed professional shoppers, who made purchases at selected store locations, then reported back to our security director if the clerks failed to properly record the sales.

In the GAo’s case, "Undercover tests at 15 for-profit colleges found that 4 colleges encouraged fraudulent [admissions] practices and that all 15 made deceptive or otherwise questionable statements to GAo’s undercover applicants." The August 4 issue of GAO Highlights reported, "Four undercover applicants were encouraged by college personnel to falsify their financial aid forms to qualify for federal aid—for example, one admissions representative told an applicant to fraudulently remove $250,000 in savings."

On that same day in August 2010, Gregory Kurtz, managing director of the GAo’s office of Forensic Audits and Special Investigations, testified about these findings before the Senate Committee on Health, Education, Labor and Pensions.

One result of the publicity was a dramatic decline in the stock values of publicly traded for-profit education companies. one wellknown firm to take a hit was the Washington Post Company. Its iconic newspaper was made legendary by Woodward and Bernstein during the Watergate scandal, but its cash cow in these days of dying daily newspapers is Kaplan, its higher education subsidiary.

According to Mark Basch at, in the first half of this calendar year, "Kaplan accounted for $1.46 billion of Washington Post’s $2.34 billion in revenue. "Kaplan had an operating profit of $166.9 million, while the company as a whole had operating income of $266.2 million."

Coming clean on August 17, the Post published a story by Nick Anderson in which it confessed, "Late Friday, the Education Department released data on student loan repayment rates that showed 28 percent of Kaplan University’s former students are repaying the principal on their federal loans. That was lower than the 36 percent repayment rate posted by the for-profit sector overall…."

Referencing the proposed ED regulations, the story continued, "The Post Company said that ‘a significant number of Kaplan schools’ could be at risk of new limits on financial aid.’"
Continued in Part 2 ...

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